US-China deal could give Beijing dangerous trade tool

Treasury Secretary Steven Mnuchin said on Monday that the US agreed with China that the enforcement mechanism of fair trade will be reciprocal, in a move that some observers believed might harm US companies and the World Trade Organization itself.

As the US government struggles to close a trade deal, it may have given China a dangerous trade tool that could expose American companies to unilateral enforcement action by Beijing and undermine current international trade laws, some observers believed, including some former American government officials.

Indeed, other countries might yet go to the WTO to challenge any final bilateral deal between Beijing and Washington.

The US wants to be able to punish China if it fails to follow-through on the commitments it has made by imposing tariffs without going through World Trade Organization procedures; but any reciprocal deal could also give Chinese leaders a way to quickly bring pressure to bear on American companies.

“This will be a two-way agreement in enforcement,’’ Mnuchin said on Monday, after saying over the weekend that the US would be open to “certain repercussions”.

If the US allows this, China would be “judge, jury and executioner as to whether we have honored our obligations,’’ ex-economic advisor to President George W. Bush, Daniel Price told Bloomberg.

According to negotiators from both sides, a deal to end the ongoing trade war that had already lasted a year was very close, with Trump having recently predicted that he would sign the final deal with Chinese leader Xi Jinping in just a few weeks.